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COUNTY OF DAUPHIN v. FID. & DEPOSIT

January 16, 1991

COUNTY OF DAUPHIN, PENNSYLVANIA, PLAINTIFF,
v.
FIDELITY AND DEPOSIT COMPANY OF MARYLAND, DEFENDANT.



The opinion of the court was delivered by: Rambo, District Judge.

MEMORANDUM

FACTUAL BACKGROUND

The undisputed facts pertinent to this motion are as follows. In February, 1984, the County entered into a contract with a prison equipment contractor, Harry C. Partridge, Jr. & Sons, Inc. ("Partridge"), for the supply and installation of security equipment to a project for new construction and renovation of the Dauphin County Prison. The Partridge contract was one of five prime contracts awarded by the County for work related to the prison project. The other four prime contracts were for general construction, electrical work, plumbing, and heating, ventilation and air conditioning.

As surety for Partridge, Fidelity issued a performance bond that named Partridge as its principal and the County as its obligee. In September, 1984, before it completed its obligations under the contract, Partridge filed for Chapter 11 bankruptcy protection and, subsequently, was found to have rejected the contract with the County. Thereafter, Fidelity, with the agreement of the County, arranged for Roanoke Iron and Bridgework Company ("Roanoke") to complete Partridge's contractual obligations. Due to Roanoke's difficulty in obtaining the required performance bond, the County and Roanoke did not enter into a new contract. Instead, Fidelity and the County agreed that Fidelity would stand behind Roanoke as the completing contractor under the Partridge contract and Fidelity reinstituted its performance bond. Insofar as they are relevant to this motion, Roanoke's obligations under the contract were the same as those of Partridge.

The contract documents were provided by the County. The contractual provisions relevant to this dispute concern the times for commencement and completion of the contractual work (Article 3, Contract and Paragraph 9, Supplemental General Conditions); liquidated damages (Article 3, Contract, and Paragraph 9, Supplemental General Conditions); final payment (Paragraph 9, General Conditions); and mutual responsibility (Paragraph 6, General Conditions).

In accordance with the time for completion of the work set forth in the contract and the notice to proceed issued by the County on February 10, 1984, Roanoke's contractual completion date was May 25, 1985. The overall project completion date set by the County was also May 25, 1985. However, it is undisputed that Roanoke did not substantially complete the work on the project until January, 1986. The County issued Roanoke a certificate of substantial completion effective January 24, 1986, which certified that Roanoke's work under the contract was sufficiently complete to allow the County to occupy or utilize the work as provided for in the contract. An occupancy permit was issued for that portion of the project that constituted new construction on July 27, 1986. By letter dated October 21, 1987, the County's architect recommended that final payment be made to Roanoke, which payment the County executed by check, dated December 3, 1987.

The County, as noted, instituted this action against Fidelity on March 31, 1989. The County alleges, and Fidelity does not deny, that there was a 244-day delay beyond the 465 days allowed in the contract for completion of Roanoke's work. The delay is measured as the time between the issuance to Partridge of the Notice to Proceed and the issuance to Roanoke of the Certificate of Substantial Completion. The County claims Roanoke's delay engendered delay to the overall completion of the project, which caused the County to incur damages totalling $1,182,686.91, mostly in the form of administrative payments to the other contractors on the prison project. While Fidelity agrees that Roanoke's work was not performed on time, it denies that Roanoke's delay caused the overall delay in the project, or the expenses the County claims as damages.

Fidelity provided this court with documents indicating that at various stages of the project, the County encountered timeliness and other problems with other prime contractors on the project. Those documents, Fidelity argues, demonstrate that the responsibility for the overall delay in the project cannot be attributed to Roanoke. Fidelity argues, further, that even if Roanoke's delay period caused some damages, under Paragraph 9 of the General Conditions to the contract, the County waived its right to damages by making final payment. In the alternative, Fidelity argues that the County is limited to liquidated damages of $100.00 per day for the 244 days of Roanoke's delay, as provided for in Article 3 of the contract, and Paragraph 9 of the Supplemental General Conditions.

DISCUSSION

Fidelity's motion requests summary judgment or judgment on the pleadings. Since the parties relied upon, and the court has considered, matters that are outside of the pleadings, the motion will be treated as one for summary judgment. Fed.R.Civ.P. 12(c); Nottingham v. Peoria, 709 F. Supp. 542, 545 (M.D.Pa. 1988).

Rule 56(c) of the Federal Rules of Civil Procedure requires the entry of summary judgment

  after adequate time for discovery and upon
  motion, against a party who fails to make a
  showing sufficient to establish the existence of
  an element essential to that party's case, on
  which that party will bear the burden of proof at
  trial. In such a situation, there can be 'no
  genuine issue as to any material fact,' since a
  complete failure of proof concerning an essential
  element of the non-moving party's case
  necessarily renders all other facts immaterial.

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The party seeking summary judgment satisfies his burden under Rule 56 by '"showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id., 477 U.S. at 325, 106 S.Ct. at 2554. The nonmoving party has the burden of demonstrating to the court that there exists a genuine issue of material fact by reference to affidavits, or depositions, answers to interrogatories, admissions on file or similar evidentiary materials. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Rule 56(e) provides that such affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. The nonmoving party may not rely on the pleadings to satisfy his burden but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty, 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). As the Supreme Court recently stated in Lujan v. National Wildlife Fed'n, ___ U.S. ___, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990), "[T]he object of [requiring a party adverse to a summary judgment motion to go beyond the pleadings] is not to replace conclusory allegations of the complaint or answer with conclusory allegations of an affidavit. . . . Rather, the purpose of Rule 56 is to enable a party who believes there is no genuine dispute as to a specific fact essential to the other side's case to demand at least one sworn averment of that fact before the lengthy process of litigation continues."; see also, Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). The substantive law defines which facts are material and only those disputes over facts that may affect the outcome of the suit under the substantive law will preclude the entry of summary judgment. Id., 477 U.S. at 248, 106 S.Ct. at 2510.

Thus, it is this court's responsibility to determine whether the County has demonstrated that there exists a genuine and material issue of fact. In making the decision "[t]he evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S.Ct. at 2513 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970). With these standards in mind the court will review the substantive law and the parties' submissions to determine a material issue of fact exists that should preclude the entry of summary judgment.

Although the County has partially characterized its claim as one in negligence, the court notes that this is a contract dispute. As such, the court's first task in reviewing this motion must be to examine the language of the contract itself. Under Pennsylvania law, the interpretation of a contract requires an initial determination by the court of whether the contract language is ambiguous, or clear and unambiguous. Polish Amer. Machinery Corp. v. R.D. & D. Corp., 760 F.2d 507, 512 (3d Cir. 1985). If the language is ambiguous, the court must turn the interpretation of the contract over to the jury. If the language is clear, however, the court must interpret the agreement. Id. Contractual language is ambiguous when it is "reasonably susceptible of different construction, is obscure in meaning through indefiniteness of expression or has a double meaning." Commonwealth, Dept. of Trans. v. Mosites Constr. Co., 90 Pa. Commw. 33, 36, 494 A.2d 41, 43 (1985). A contract is not ambiguous by the mere fact that the parties disagree on the proper interpretation to be given the language. Commonwealth State Highway & Br. Auth. v. E.J. Albrecht Co., 59 Pa. Commw. 246, 251, 430 A.2d 328, 330 (1981).

We are mindful of the fact that Pennsylvania courts apply the "plain meaning" rule of interpretation of contracts, an approach to contract interpretation that assumes that "the intent of the parties to a written contract is . . . embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement." Steuart v. McChesney, 498 Pa. 45, 48-49, 444 A.2d 659 (1982). This approach is found to "enhance the extent to which contracts may be relied upon by contributing to the security of belief that the final expression of consensus ad idem will not later be construed to import a meaning other than that clearly expressed." Id. at 52, 444 A.2d at 663.

In the instant case, the court must determine whether either the final payment or liquidated damages provisions in the contract documents is ambiguous. The contract ...


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